Cooling Off After Huge Profits at the End of 2018?

The US stock market has been enjoying a bullish run in recent weeks, though the gains have been so large and so fast that the market was starting to look a little over-extended. Suspicions of an overbought situation appear to have been confirmed after Wall Street reversed early gains on Monday to finish substantially in the red, falling to its lowest in more than two weeks.

Whether the market can stabilise here or face further falls may depend on whether firm progress arises from the ongoing trade talks between the US and China and on signs of health from economic indicators. We have a crucial report in this latter area due at the end of the week, when we will see the latest official US employment figures.

Other major stock benchmarks continue to fare well, with the German DAX close to a four-month high and the UK FTSE 100 similarly near the upper end of its range for the last several months.

The top trader we are catching up with today is a fairly new account but has managed to put up some gaudy numbers in just a few short months. The account has the rather unsubtle name of makeyourich, but is the name justified? Let’s take a look at the headline numbers and try and find out.

The two most striking items on display here are the size of the positive performance and the extremely short span of time in which it has been achieved. The account is up more than 59% and they only started trading in November of last year.

That is phenomenal going. That said, there are more than a couple of reasons not to get too carried away.

First of all, there is evidently a bit of a gung-ho attitude to risk going on here, as we can see from the sizeable maximum drawdown, the high volatility percentage and the risk score of 4. That’s a kind of medium range risk score; it’s therefore not overly alarming, but certainly worth bearing in mind. If you have a conservative attitude to risk, this may not be an appropriate account for you.

Let’s move on to explore the month-by-month breakdown of profits for this account:

This really is quite revealing. We can see that they had a superlative December, and that is the source of all the profit. Take away that month, and the account is treading water.

This makes judging the account a little more thorny: we have a very short track record combined with extremely inconsistent performance from month to month. Nevertheless, the account is inarguably up by a significant amount.

Let’s move on to look at which instruments they have been trading with, in order to gain more insight into this account.

We have a reasonably well-balanced mix of markets here, with no one asset dominating the picture. Yes, there is a quite a large exposure to the US stock market, but it is balanced alongside precious metals, oil and a substantial chunk of other assets.

To conclude, what makes this account attractive is the size of the profit, but that stems all from one outstanding month in December. Given the brevity of the track record and the uneven monthly profit performance, it’s an account that may be more sensible to observe for the time being and wait for evidence of them catching fire again.